Markets Spike on Report ECB Is Weighing New Steps

CNBC.com With Reuters

Friday, 27 Jul 2012 | 2:04 PM ETCNBC.com

SHARES

Thierry Charlier | AFP | Getty Images

European Central Bank President Mario Draghi testifies before the European Parliament's economic affairs committee in his role as the head of the European Systemic Risk Board on May 31, 2012 in Brussels.

Financial markets spiked higher Friday afternoon on a report that European Central Bank President Mario Draghi is in talks with Germany's Bundesbank on new measures to ease the euro zone's continuing debt crisis.

Bloomberg reported that Draghi is set to talk with Bundesbank President Jens Weidmann about lowering interest rates and increased bond buying, among other measures.

The report added more fuel to the US stock rally, sent Treasury prices skidding and pushed the euro up sharply against the dollar.

An ECB spokesperson wouldn't confirm or deny the report but told CNBC that it was "normal" for Draghi to talk to other European central bank chiefs before they meet as members of the ECB governing council, which is similar to the Federal Reserve's Open Market Committe. Such a meeting is scheduled for next Thursday.

ECB Spokesman: Won't Confirm or Deny Draghi Meeting

CNBC's Steve Liesman reports that an ECB spokesperson said it's "normal" for Mario Draghi to talk to members of the governing council. Tyler Vernon of Biltmore Capital, and CNBC's Bob Pisani weigh in.

The report came after German Chancellor Angela Merkel and French President Francois Hollande pledged to do all in their power to protect the euro. The statement Friday came after the two leaders discussed the debt crisis by telephone

Draghi also pledged the day before to do whatever was necessary to protect the euro zone from collapse, which sent the markets and the euro higher on Thursday.

"Within our mandate, the ECBis ready to do whatever it takes to preserve the euro. And believe me, it will be enough," he told an investment conference in London.

He said the central bank could fight unreasonably high government borrowing costs. This week has seen Spanish bond yields hit dangerously high levels.

"To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate," Draghi said.

Dieter Zetsche, chair of Daimler, says that he is unsure why Apple would want to enter the car industry, but that he would welcome them as either a partner or competition. Zetsche adds that Daimler would "exploit" any new technology opportunity.